Doubling Down with Double-Speak: ETNO Responds to Critics

September 12, 2012

When is a request for regulatory intervention not a request for regulatory intervention? Just ask the European Telecommunications Network Operators’ Association. Last week, ETNO published a response to critics of its controversial proposal to amend the International Telecommunication Regulations (ITRs), attempting to stress that the association was not asking for governments to weigh in on commercial Internet interconnection agreements.

The problem is, that’s exactly what ETNO is asking for. The ITRs are a global treaty that delineates the regulatory authority of the ITU. ETNO’s proposed amendment – roundly criticized by CDT, the Internet Society, and others when it was issued in June – calls for extending the ITRs’ reach beyond traditional telcos to cover a potentially wide range of entities from across the Internet. The proposal expressly calls for using the ITRs to establish a new interconnection system that would differ in key ways from the commercial interconnection agreements that have been privately negotiated to date. ETNO would have the ITRs specify that network operators should structure their interconnection agreements to include end-to-end Quality of Service (in other words, pay-for-priority) and the principle of “sending party network pays” (in other words, pay-for-delivery). As we wrote in June, acceptance of these proposals would mark a dramatic shift in the market for interconnection, upending basic principles of Internet neutrality and resulting in higher costs for end-users and potentially decreased access to information in developing economies.

ETNO attempts to frame its proposal as one that would simply remove barriers to the types of deals its members want to make with content providers. But neither the original proposal nor the recent paper point out exactly what those barriers are. ETNO cites the rise of large content providers, increases in Internet video traffic, and the proliferation of connected devices to argue that the market is changing, but presents no evidence that the market for interconnection isn’t functioning properly – and certainly no evidence that the ITRs themselves stand in the way of anything ETNO members want to do. It seems more likely that ETNO members are trying to use the authority of the ITU to force more favorable agreements than they can negotiate absent regulatory intervention.

Indeed, some of the “evidence” cited in the paper actually cuts against ETNO’s proposal. The paper cites the growth of content-delivery networks as evidence of growing demand for higher quality of service. But as we noted in our June critique, ETNO’s proposal would most likely reverse the trend toward CDNs and efficient content-localization. “Sending party network pays” would create strong incentives for last-mile networks to opt against local content caching in order to collect compensation from sender networks forced to re-send the same content again and again.

ETNO additionally claims that a system where content providers have to pay distant networks for access to customers will “enrich the Internet ecosystem” and increase content diversity. The more likely result, however, is that large entrenched players with the ability to pay will do so, cementing their dominance and raising huge new barriers to potential competitors. The Internet’s power to drive innovation comes from its low barriers to entry – once you plug in, you and your service can reach everyone else on the network of networks. While there are some disparities (not every service can be fully deployed on a global CDN on day one, for example), a system that effectively forced new entrants to “pay to play” would dramatically upset that competitive environment.

Nobody disputes that telcos need to generate revenues sufficient to sustain investment. But it’s just not true that, as ETNO asserts, “Over the Top players . . . are not contributing to network investment.” Providers of popular online content and services already invest huge amounts of money in their own networks, bandwidth, and CDN deployment in order to stay competitive as traffic grows; they interconnect with telcos via freely negotiated agreements; and they fuel customer demand for broadband Internet access. European member states are meeting this week to discuss regional proposals to amend the ITRs.Yesterday, the chair of ETNO tweeted that the ETNO proposal would be discussed at the next regional meeting in October. Attendees of that meeting – and ITU member states more broadly – should reject the idea of trading away the unified, global nature of the Internet in hopes of generating some incremental revenue for established telcos.